Hedge Fund Seeks Evidence from Citigroup Over Argentina Threats

Sep 02, 2014 12:15 pm ET

Sept. 2 (Bloomberg) -- On Friday, the U.S. judge overseeing a fight between Argentina and its defaulted bondholders set a hearing for next week on a hedge fund’s subpoena for evidence Citibank was threatened by the South American nation.

Citibank’s parent, Citigroup Inc., had argued it could lose its Argentine branch if a U.S. appeals court doesn’t allow it to distribute money to Argentina’s restructured bondholders, a move barred by U.S. District Judge Thomas Griesa in Manhattan unless defaulted debtholders are also paid.

In court papers filed over the weekend, hedge fund NML Capital, a defaulted debtholder controlled by billionaire Paul Singer, expanded on its bid for evidence. NML seeks to compel the bank to provide evidence of claims that Argentina threatened it with punitive measures if it continues to comply with Griesa’s order. The hearing before Griesa is Sept. 10.

NML said the request is “urgent, time-sensitive and critical” to the functioning of Griesa’s orders. Citigroup has argued to the U.S. Court of Appeals in New York that compliance with Griesa’s order will place it in a “dangerous position” and subject it to “grave sanctions” at the hands of the Argentine government, including possible imprisonment of its officers and expulsion of its business.

NML said Citibank hasn’t proffered any evidence of any threats by Argentina aside from a letter submitted to the appeals court.

Griesa’s intervention “is needed co compel Citibank’s compliance” and to allow NML to fully investigate the threats described by the bank, the hedge fund said. NML asked the judge for an order “compelling Citibank to produce a witness for deposition and all responsibe documents” no later than Sept. 15, which is three days before an oral argument will be heard on Citibank’s challenge before the appeals court.

Danielle Romero-Apsilos, a spokeswoman for Citigroup, didn’t immediately return a call seeking comment on the filing.